Okinawa sees path to economic independence without U.S. bases

Okinawa hosts nearly three-quarters of the U.S. military bases in Japan, and those who oppose calls to reduce this burden have often said the island prefecture is dependent on the bases for its economy.

However, some experts now say there are increasing opportunities for prosperity in Okinawa even without the economic benefits of hosting the bases — which include rent income and consumption by service members — given recent examples of commercially successful use of land returned to Japan by U.S. forces.

“Okinawa’s economy is no longer dependent on the U.S. bases,” said Yasuo Kurima, a professor emeritus at Okinawa International University. But he also noted that it is uncertain whether such chances would increase when more land is returned.

Aeon Mall Okinawa Rycom in the village of Kitanakagusuku is widely seen as an example in support of the prefecture’s economic independence.

The five-story shopping mall with a total floor area of around 160,000 square meters opened in 2015 on land which had been a golf course for U.S. military personnel since 1948.

Some 13 million people, including Japanese and foreign tourists as well as U.S. military personnel, visit the 200-store mall every year, according to operator Aeon Mall Co.

“Our business is going well so far,” said Norimasa Sato, general manager of the mall.

Sales from tax-free shopping there were the highest among all Aeon shopping malls in the country in fiscal 2017.

“We come here roughly every two months without any purpose. It is convenient because we had no place to hang around before,” said Kenji Maedo, 34, who visited the shopping mall with his family. Most local residents know the mall was built on a site once used by the U.S. military, he said.

The operating firm signed deals with around 380 landowners in 2009 to construct the shopping mall. The U.S. military returned the site to Japan the following year.

Other redevelopment projects on former U.S. military sites include the construction of Mihama American Village, a shopping and entertainment area in the village of Chatan, and a new urban district in the prefectural capital of Naha.

With those projects, Okinawa’s economic dependence on the U.S. military has been declining, the prefectural government said.

The ratio of revenue from hosting the bases — including rent and income for Okinawa residents employed at the U.S. facilities — to gross income in the prefecture dropped to 5.3 percent in 2015 from 15.5 percent in 1972, the year of Okinawa’s reversion to Japan, according to the prefecture.

In 2015, the prefectural government estimated economic effects from the new Naha district and two other redeveloped areas at around ¥246 billion, including shop and restaurant sales and real estate rent, 28 times higher than before the land was restored.

The prefecture also said such favorable effects were expected to expand with the possible return of land used by five other facilities, including U.S. Marine Corps Air Station Futenma.

The central government is working to relocate the Futenma base from a crowded residential area of Ginowan to the less populated Henoko coastal area of Nago, despite opposition led by new Gov. Denny Tamaki, who says the base should be moved outside the prefecture.

Some experts say, however, that the prefectural government’s projections may be too optimistic.

Akira Shinohara, a former professor of public finance at Daito Bunka University in Tokyo, warned that locating too many commercial facilities in the island prefecture could have a negative impact on its economy.

“If so many commercial and entertainment facilities are built everywhere in Okinawa, it would be obviously an excess of supply,” Shinohara said.

In fact, many private landowners in Okinawa are hoping their property will continue to be used by the U.S. military because of relatively high rent, making it difficult to form a consensus about how to use the land in the future, according to Shinohara.

The rent is set through negotiations between landowners and the state and paid by the Japanese government, based on an agreement between the United States and Japan.

To form a smoother consensus among landowners, the central government should temporarily buy all the land to be returned and consolidate the opinions of not only landowners but also local residents before handing over the property to the private sector, said Kurima of Okinawa International University.

As the central government has raised the rent received by landowners, it must also be the government that “takes responsibility for the result,” he said.